Breaking Down the HPAI Outbreak
In addition to the differences (and similarities) in flock type, there are considerable differences in where detections are happening. During the 2014-2015 outbreak, 91% of detections in commercial flocks occurred in the Mississippi flyway. The remaining 8% and 1% of detections occurred in the Central and Atlantic flyways, respectively. Today, the Mississippi flyway is also the hardest hit, but not as overwhelmingly as 2014-2015, with 49% of detections in commercial flocks. With 35 detections, the Central flyway has 36% of commercial detections. The remaining 15% of detections have occurred in the Atlantic flyway.
Describing the incident of detection by flyway is important to appreciating the potential impact to different poultry and poultry product markets. The Mississippi flyway was home to more than 50% of commercial production of turkeys, broilers and layer hens and more than 40% of broilers in the last year. Growers in the Atlantic flyway were responsible for 40% of broiler production and more than 20% of turkey, layer and pullet production each. The latest data shows growers in the Central flyway were responsible for 10% or more of the production of broilers, layer hens and pullets. An increasing number of detections in commercial flocks in these critical flyways are likely to roil the markets. The “other” category includes state estimates that are not shown by USDA and states withheld by USDA to avoid disclosing data for individual operations.
Layer Hens and Pullets
During the 2014-2015 outbreak, there were 50 outbreaks of HPAI in commercial layer chicken flocks. Approximately 43 million egg-layer hens/pullets were affected by HPAI and died from the disease or were depopulated as part of the response. (A pullet is a hen under 1 year of age; it has not started laying eggs yet.) This depopulation was equivalent to 10.01% of the average U.S. inventory of layer chickens and 6.33% of the average U.S. inventory of pullet chickens. Eighty-eight percent of the detections were in the Mississippi flyway. The remaining 12% were in the Central Flyway. Iowa (Mississippi flyway), the nation’s largest egg-producing state, was particularly hard hit. Thirty-six detections of HPAI in commercial layer and pullet operations led to the euthanasian of more than 25 million egg-laying hens and 5 million pullets. As a result, egg production in 2015 was 3.2% lower than in 2014.
In 2022, nearly 17.9 million layers and 0.83 million pullets have been depopulated as a result of HPAI. Nationally, this is equal to 4.6% of the average number of laying hens on hand in 2021 and 0.7% of the total inventory of pullets as of Dec. 1, 2021. For some states, however, the impact has been much greater. Iowa, which had an average of 48.87 million layers in 2021, has had to depopulate more than 12.75 million layers, over a quarter of the total number of laying hens in the state. Also, hard hit in the Mississippi flyway is Wisconsin, which has had to depopulate more than 2.7 million hens, over 35% of the average number of laying hens in the state in 2021. In the Atlantic flyway, Maryland has been forced to depopulate more than 1.16 million hens, nearly 50% of the average number of laying hens in the state in 2021. Maryland has been forced to depopulate more than a quarter of the state’s 1.225 million pullets as of Dec. 1, 2021.
During the 2014-2015 outbreak, there were 160 outbreaks of HPAI in commercial turkey flocks. Approximately 7.4 million turkeys were affected by HPAI and died from the disease or were depopulated as part of the response. This depopulation was equivalent to 7.46% of the average U.S. inventory of turkeys and 3.16% of annual production. More than 92% of the detections then were in the Mississippi flyway. Seven percent were in the Central flyway and less than 1% was in Pacific flyway. Minnesota which is the nation’s largest turkey producing state (Mississippi flyway), was particularly hard hit. One hundred and four detections of HPAI in commercial turkey operations in Minnesota led to the euthanasian of more than 4.8 million turkeys. Iowa was also hit hard, with 35 detections in commercial flocks. Combined, in 2014, Minnesota and Iowa raised nearly 24% of the nation’s turkeys
In 2022 so far, more than 3.2 million turkeys have been depopulated as a result of HPAI. Nationally, this is equal to 1.4% of the number of turkeys raised in 2021. Again, for some states, the impact has been much greater. South Dakota (Central flyway), which raised 4.5 million turkeys, or 2% of the nation’s total production, in 2020 has had to depopulate 1.288 million turkeys – nearly 30% of the number of turkeys raised in the state in 2020. Minnesota, which raised 40 million head of turkeys in 2020 has had to depopulate more than 1 million turkeys, about 3% of what the state raised in 2020.
The broiler sector was largely spared during the 2014-2015 outbreak. Less than 0.01% of the average U.S. inventory was lost as a result of HPAI. In 2022, there have been nine detections of HPAI in commercial flocks. Thus far, a little more than 2.1 million birds have been depopulated, which represents a little more than 0.02% of the number of broilers raised in 2020.
Economic and Trade Impact
A report from the Congressional Research Service estimated the value of turkey and laying hen losses due to the 2014-2015 HPAI outbreak at nearly $1.6 billion. The same report estimated that economy-wide losses were $3.3 billion. The economic impact was heightened due to restrictions imposed by trading partners. Eighteen partners cut off poultry trade with the U.S. entirely, an estimated loss of $898 million in 2014. Thirty-eight countries followed a regionalization approach to trade restrictions, limiting U.S. exports of poultry and poultry products only from those states with HPAI detections. This allowed trade to continue from parts of the U.S. that were not affected. CRS estimates that this helped to preserve 86% of the value of traded U.S. poultry and poultry products (including eggs), based on 2014 values.
It’s too early to know how large of an impact the 2022 outbreak will have on the U.S. poultry sector. When comparing the week-by-week data on HPAI detections in 2022 relative to 2015 a few things are evident. Significant detections of HPAI in commercial flocks started about five weeks earlier in 2022, and they have risen more quickly than in 2015. The chart below is also a good reminder that water temperatures warm much more slowly than air temperatures, i.e., during the 2014-2015 outbreak, the last reported new case was in Iowa on June 17, 2015. We potentially have a long way to go before the spread from migrating wild waterfowl ends. The ability to contain the spread to other commercial flocks through high biosecurity measures is paramount.
The other key element depends on our trading partners continuing to follow a regional approach to trade restrictions. So far, so good on that front. Trade partners, like China, that did not follow a regional approach in 2015 are following a regional approach so far. In China’s case, states with detections in domesticated flocks (commercial or otherwise) are finding themselves added to the list of states ineligible to export to China, while all other states may continue to do so. You can keep up to date on each country’s changing list of ineligible products here.
What we can say is that the inventory of eggs in the grocery store for your Easter and Passover celebrations remain high. According to data from USDA’s Agricultural Marketing Service, in these two weeks prior to Easter there is more inventory of shell eggs available in 2022 than during the same time in 2015. Actually, 38% more. The drawback – you’ll have to pay more for them. Egg prices, adjusted for inflation, two weeks prior to Easter are nearly 15% higher than they were during the same time in 2015, though not as high as in 2020 when the industry was turned on its head by the onset of COVID-19. Today’s pricing suggests that the market doesn’t necessarily believe the industry has HPAI contained quite yet.